Mortgage brokers across Melbourne and Sydney are working with their clients who need guidance following the Reserve Bank’s decision to lift the official cash rate on Tuesday.
Sydney-based New Vision Financial Services managing director and broker Chris Brown (pictured above) said due to the lifting of interest rates he was discussing with his clients about whether fixing their rate was the right move that suited their needs and objectives.
“We have been making clients are aware that with rate increases comes changes to servicing to ensure clients looking to purchase are not at their maximum servicing capacity,” Brown said.
“It’s about making sure clients are informed with the correct information and not just what they hear in the media.”
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New Vision Financial Services, based in Glenwood in Sydney’s northwest, was contacting clients earlier this year when fixed rates move upwards and a lift in the official cash rate looked certain.
“We found by contacting our existing clients it helped them understand whether it was better for them to be looking at fixed or variable based on their individual circumstances,” he said.
“Having conversations with clients around this assisted them greatly.”
Brown said the main thing for clients to remember was that interest rates were still extremely low, and the questions were when and how much higher would they go.
“Clients need to be mindful of this and as mortgage brokers we are here to provide them the support and information they need to ensure they have all the facts when deciding what is right for them,” he said.
Brown said he had seen property prices in the northwest and Hills district of Sydney rise significantly. How, over the last couple of months he had noticed a shift with average time on market increasing and prices beginning to stabilise.
“I see the market stabilising while people wait to see the outcome of the election and if there will be further increases in interest rates in quick succession,” he said.
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Mortgage broker Elodie Blamey (pictured below), who works at Melbourne brokerage Clover Financial, said the team was in a lucky position “as we forewarned our clients that interest rates would be rising”.
“With rates so low last year, we knew it would not be feasible for them to stay so low, so we ensured a lot of our clients were prepared for rates to start rising, ” Blamey said.
The Hawthorn broker said she received a few panicked calls from clients on Tuesday afternoon, however assured them the interest rate rise would not have too much of a financial impact.
“The RBA’s decision to increase rates is not the end of the world,” Blamey said.
“We are expecting more rate rises this year, so we will be working through our database to make sure our clients are educated around the best home loan option for them. At the moment we are working through speaking to people who have purchased property in the last two years and working back from there.”
Blamey said her team liked to set people up for their lifestyle and each client was stress tested.
“Lots of people I have spoken to about this week’s RBA announcement feel better after they have spoken to a broker,” she said.
“The benefit of visiting a broker is we work in the client’s best interest long term and we focus on budgeting and living expenses.”
Clover Financial is in Hawthorn, about 8km from the Melbourne CBD, a family-oriented area with plenty of good schools, said Blamey.
“During the craziness of last year, properties were selling for hundreds of thousands of dollars above reserve and we have noticed house auctions now are not as crazy as they were,” she said.
“Areas like [beachside suburb] Apollo Bay has increased significantly in price. With people still working from home, many are questioning why they would still need to live in the city.”